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The Value of Homes in Cluster Development Residential Districts: The

Relative Significance of the Permanent Open Spaces Associated with Clusters

Article  in  The Journal of Real Estate Finance and Economics · September 2012

DOI: 10.1007/s11146-012-9383-y

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J Real Estate Finan Econ
DOI 10.1007/s11146-012-9383-y

The Value of Homes in Cluster Development Residential

Districts: The Relative Significance of the Permanent
Open Spaces Associated with Clusters

Paul K. Asabere

# Springer Science+Business Media, LLC 2012

Abstract This study uses the hedonic framework to look at an aspect of planning and
its effects on property values. Specifically, the study examines the impacts of cluster
residential development on home value using data on Lower Gwynedd Township
(Pennsylvania, USA). Other factors remaining constant, the study finds that proper-
ties located within cluster developments (CLUS) attract premium prices of roughly
3.9 %, on average, relative to properties in conventional developments. However, part
of the 3.9 % price premium is attributable to the permanent open spaces which are
parts and parcels of clusters. When the variable for open space (OPEN) is introduced,
the cluster (CLUS) premium reduces to 2.02 % suggesting the relative importance the
permanent open spaces. The open space variable (OPEN) is associated with a premium
of as much as 5.2 %, on average. The density of development variable (DENSITY) is
significantly negative at conventional levels. The normative implication of the density
finding is that raising permitted densities, per se, in a sub-urban setting where market
densities are lower than permitted densities, will have adverse impacts on home value.
The results of this study provide empirical support for sustainable, greener, residential
cluster development.

Keywords Cluster residential development . Density bonuses . Permanent open space .

Hedonic framework . Home value

Introduction

Residential cluster development is a form of land development in which principal

buildings and structures are grouped together on a site, thus saving the remaining land
area for common open space, conservation, agriculture, recreation, and public and semi-
public uses (Whyte 1964; Unterman and Small 1977; Arendt 1996; Sanders 1980).

P. K. Asabere (*)
FSBM, Temple University, Philadelphia, PA 19122, USA
e-mail: pasabere@temple.edu
 P.K. Asabere

In the United States, the development of Radburn, New Jersey, in 1928 represented
the first formal introduction of the cluster development concept. In Radburn, single-
family homes and garden apartments are sited in “superblocks” of 35 to 50 acres
(Stein 1957). Clustering also became the basic site design concept in such contem-
porary new towns as Reston, Virginia, and Columbia, Maryland (APA 2006). It drew
on English town planning principles, notably those of the so-called “garden city”
movement.
The “garden city” movement is an approach to urban planning that was founded in
1898 by Sir Ebenezer Howard in the United Kingdom. Garden cities were intended to
be planned, self-contained, communities surrounded by greenbelts, containing care-
fully balanced areas of residences, industry, and agriculture (see for example Godall
1987).1 Notable “garden city” examples in the United States include: the Woodbourne
neighborhood of Boston; Newport News, Virginia’s Hilton Village; Pittsburgh’s
Chatham Village; Garden City, New York; Sunnyside, Queens; Jackson Heights,
Queens; Forest Hills Gardens, also in the borough of Queens, New York; Radburn,
New Jersey; Greenbelt, Maryland; the Lake Vista neighborhood in New Orleans; Norris,
Tennessee; Baldwin Hills Village in Los Angeles; and the Cleveland suburb of Shaker
Heights.
Today, there are many garden cities in the world. Most of them, however, have
devolved to exist as just dormitory suburbs, which completely differ from what Howard
set out to create. Contemporary town-planning charters like New Urbanism, Principles
of Intelligent Urbanism, and Cluster Residential Districts (the subject of this study) find
their origins in this movement.
The typical planning goals of cluster development are as follows:
a) preservation of open space to serve recreational and scenic purposes;
b) improved living environments which with a variety of housing that permits more
economical housing to be constructed;
c) provide a pattern of development in harmony with the natural features of land;
and,
d) provide an economical subdivision layout, efficient use of the land, with smaller
networks of utilities and streets.
Many studies have apparently tied “open space” to value [see for example, Correll
et al. (1978); Bolitzer and Netusil (2000); Luttik (2000); Smith et al. (2002);
Geoghegan (2002); Irwin (2002); Lindsey et al. (2004); Evenson et al. (2005);
Earnhart (2006); Krizek (2006); and Asabere and Huffman (2009)]. Open spaces,

1
Inspired by the Utopian novel Looking Backward, Howard published his book To-morrow: a Peaceful
Path to Real Reform in 1898 (which was reissued in 1902 as Garden Cities of To-morrow). His ideal garden
city would house 32,000 people on a site of 6,000 ac. (2,400 ha), planned on a concentric pattern with open
spaces, public parks and six radial boulevards, 120 ft (37 m) wide, extending from the centre. The garden
city would be self-sufficient and when it reached full population, a further garden city would be developed
nearby. Howard envisaged a cluster of several garden cities as satellites of a central city of 50,000 people,
linked by road and rail. Howard organized the Garden City Association in 1899. Two garden cities were
founded on Howard’s ideas: Letchworth Garden City and Welwyn Garden City, both in Hertfordshire,
England. Howard’s successor as chairman of the Garden City Association was Sir Frederic Osborn, who
extended the movement to regional planning. The concept was adopted again in England after World War
II, when the New Towns Act triggered the development of many new communities based on Howard’s
egalitarian vision.
The Value of Homes in Cluster Development Residential Districts...

greenways, trails (green amenities already tied to value enhancement) are common in
cluster developments. If clusters provide a package of these value added enhance-
ments, one would expect to see some evidence in hedonic pricing modeling that
supports the positive impact of cluster on price.
Conversely, as noted above, one of the goals of clustering is to produce high density
and economical housing. The cramped living spaces associated with high density
developments, usually the trade-off for clustering, could create negative externalities.
However, the relationship between density and property values is not that simple. An
increase in legally-permitted density will probably increase the value of a property if its
market density is higher than the permitted density. Studies showing the effects of land
use and environmental regulation on housing costs include: Courant (1976); Dowall
(1979); and Katz and Rosen (1987).
Thus, we have an empirical question that needs to be resolved by this work. Albeit,
will the effect of the competing equilibrium forces due to clustering be positive or
negative? The objective of this study is to resolve this empirical question.
The next section presents a brief description of residential clusters in the study area
and the study framework.

Cluster Residential Districts, the Study Area and the Data

There are two types of cluster development residential zoning districts in the township of
Lower Gwynedd. These districts are classified by the Lower Gwynedd Township Zoning
Ordinance,2 as “AA-1” and “A-1” residential districts. These forms of development
may permit a reduction in lot area requirements, frontage and setbacks to allow
development on the most appropriate portions of a parcel of land in return for provision
of a compensatory amount of permanently protected open space within the develop-
ment. In effect, a developer of a tract in a cluster district may request as a conditional use,
in accordance with Section 1298.07 and 1258.10 of the zoning ordinance that the tract
be permitted to be developed at higher density if there is preservation of open space.
Among other things, cluster residential developments in the “A-1” district must
have a minimum of 10 acres and shall be in a single and separate ownership or shall
be the subject of an application filed jointly by all the owners of the entire tract, who
shall stipulate that the entire tract will be developed in accordance with the approved
plan. The corresponding minimum for the “AA-1” district is 5 acres.3 The existence
of these residential clusters in our study area presents a unique opportunity for a study

2
See Lower Gwynedd Township Zoning Ordinance, Title Six Zoning, 06-15-2009.
3
The general zoning requirements for the “AA-1” residential zoning district are as follows: residential
district with a lot area of not less than 70,000 square feet for every building; number of dwelling units shall
not exceed 0.45 dwelling units per developable acre over the developable area of the entire tract; and a
minimum lot with of not less than 225 ft at the building line shall be provided for every dwelling. The
corresponding requirements for the “A-1” residential zoning district are as follows: residential district with
a lot area of not less than 80,000 square feet for every building where neither public sewer nor public water
is available, not less than 60,000 square feet where either of public sewer or public water is available, and
not less than 35,000 square feet when both public sewer and public water are available; the number of
dwelling units shall not exceed 0.90 dwelling units per developable acre over the developable area of the
entire tract; and a minimum lot with of not less than 175 ft at the building line shall be provided for every
dwelling.
 P.K. Asabere

of their potential impacts on home values. To the best of my knowledge, there exists
no empirical evidence on the impacts of clusters.
The study area is the township of Lower Gwynedd located in Montgomery County,
Pennsylvania. Lower Gwynedd is an affluent township with residents having a median
household income of $74,351. In comparison, the State of Pennsylvania has a median
household income of $50,713 (2000 census). The census also recorded a total of 10,442
residents (an estimate for 2005 was 10,920 residents). The total housing stock in 2008
was 4,784 with an average home value of $252,344 (MCPC 2008).4 Inter neighbor-
hood comparisons show that the residential neighborhoods of Lower Gwynedd are
quite uniform in quality with median housing prices between $350,000–$545,000
(MCPC 2008). There is only one school district in Lower Gwynedd Township, and
there are no discernible variations in the demographics and the quality of public
goods across the subject cluster versus non-cluster neighborhoods.
The sample consists of a sample of 1,502 Single-family home sales that occurred
from January 2005 to December 2009 in the Township of Lower Gwynedd. All single
family detached sales in Lower Gwynedd during the five-year sample period were used,
except for a number of distressed sales and sales with missing data. Information about
the transactions was obtained from the Montgomery County Board of Assessment
(BOA).5 The database provides information on the sales price, and a set of variables
describing property characteristics such as amenities, location, and date of sale, age,
square footage, lot size, property address, rooms, baths, and so forth.
Information on cluster residential development in the Lower Gwynedd Township is
provided by the Building and Zoning Department as summarized in Table 1. Among
other things, the cluster development data contain a list of all cluster residential
developments. As can be seen in Table 1, there are a total of 19 cluster developments
in the township. Five out of the 19 are in “AA-1” cluster development districts while
the remaining 14 are in “A-1” districts. About 11 % of the transactions in our
database are cluster housing. The 19 clusters together cover a total area of 537.5
acres with an average density of 0.76 dwellings per acre with 31 % preserved as open
space. The detailed nature of the information on the clusters made it relatively easy to
distinguish cluster developments from non-cluster developments. Table 2, presents
the data and summary statistics of the five-year database used for this study. The next
section presents “The Empirical Framework and the Estimation Results”.

The Empirical Framework and the Estimation Results

In explaining house prices, the real estate literature has typically used the hedonic
framework to identify the marginal effect on house prices of various housing character-
istics. The empirical framework for this study is the hedonic model (Rosen 1974).
Sirmans et al. (2005) examines hedonic pricing models for over 125 empirical studies

4
See Montgomery County Housing Units Build Report, Montgomery County Planning Commission,
2008.
5
The BOA database is compiled by division of Information and Technology Solutions, Montgomery
County Courthouse, P.O. Box 311-Suite 808, Norristown, 19404-0311.
The Value of Homes in Cluster Development Residential Districts...

Table 1 Cluster Development in Lower Gwynedd Township

Project Gross acres Density: dwelling Acres of % of site

Units/Acre open space preserved

“AA-1” Districts
Guidi-School House 6.5 0.62 1.6 25
Gwyn Crest 22.7 0.66 9.3 41
Gwynedd Valley 20.5 0.59 6.7 33
Weber Tract 19.7 0.56 8.0 41
Gladestry/Wharton 36.7 0.44 13.2 36
“A-1” Districts
MJE Builders 10.5 0.57 1.2 11
Parson’s Glen 21.2 0.85 6.0 28
Trewellyn Estates 105.2 0.68 38.3 36
Walnut Farm 12.2 0.74 2.0 16
Estates@Cedar Hill 51.8 0.79 17.6 34
Red Stone 10.6 0.94 2.1 20
Wooded Pond 35.2 0.91 9.2 26
Wyndham Woods 50.5 0.91 15.3 30
Foxfield 23.2 0.86 4.9 21
Spring House Farms 57.3 0.89 19.8 35
Meadow Creek 33.3 0.84 9.5 29
Willits Pond 10.0 0.80 1.5 15
Gwynedd Reserve 10.4 0.87 1.2 12
GRAND TOTAL 537.5 0.76 167.4 31

Building and Zoning Department, Lower Gwynedd Township, September 27, 2006, Ref. #8100-51.
*Denotes numbers with averages that are slightly off perhaps due to rounding.

and finds that these studies have examined a vast number of variables. However, the
impacts of cluster on house price were not identified as one of the variables previ-
ously studied.
The well-known hedonic framework is employed as shown by Eq. 1, below:
Xn
LnðSPÞ ¼ Lnðb 0 Þ þ b1 ðCLUSÞ þ b2 ðOPENÞ þ b3 ðDENSITYÞ þ j¼4
bjXij þ ej ð1Þ

Where:
Ln (SP) The natural log of sales price
DENSITY Dwelling units per developable acre permitted
CLUS Dummy variable for cluster residential development
OPEN Acres of open space in the subdivision
Xij Conventional hedonic
ej Error term.
In addition the traditional OLS hedonic, this study also utilizes the spatial autor-
egression (SAR) estimator on the hedonic model. The WLS (plus SAR) procedure is
employed owing to the fact that hedonic housing price studies of this type are prone
 P.K. Asabere

Table 2 Descriptive statistics Variable Definition Mean Stan

Dev

SP Selling price (‘000) 275.67 198.82

CLUS Dummy variable for a 0.11 0.20
residential cluster development
CLUS(AA-1) Dummy variable for AA-1 cluster 0.04 0.11
CLUS(A-1) Dummy variable for A-1 cluster 0.07 0.19
(CLUS X Mean house size for clusters 28.90 9.66
SQFT) in square feet (‘00)
((NCLUS) Mean house size for non-clusters 32.21 13.01
X SQFT) in square feet (00)
DENSITY Dwelling units per developable acre 0.65 0.47
permitted in subdivision
OPEN Acres of open space in subdivision 4.3 2.59
NSTORS # Stories 1.40 0.51
NROOMS # Rooms 5.37 1.03
NBATHS # Bathrooms 1.79 0.76
SQFT Living area in square feet(‘00) 32.65 11.81
LOT Lot size in square feet(‘00) 195.50 42.90
AGE House age in years 38.42 17.25
EXCL Dummy variable for excellent condition 0.32 0. 22
GOOD Dummy variable for good condition 0.41 0.29
AVRGE Dummy variable for average condition 0.20 0.36
POOR Dummy variable for poor condition 0.17 0.07
POOL Dummy variable for pool 0.19 0.32
GARAG # Garages 1.83 0.77
BSMT Dummy variable for finished basement 0.81 0.29
FIREPL Dummy variable for fireplace 0.24 0.48
DECK Dummy variable for deck 0.18 0.45
AC Dummy variable for central air 0.23 0.37
conditioning
TBD Distance to township center 1.53 2.56
GWYDD Dummy variable for location 0.12 0.34
in the village of Gwynedd
GWYVL Dummy variable for location 0.17 0.29
in the village of Gwynedd Valley
PENLYN Dummy variable for location in the 0.32 0.45
area of the original village
of Pennlyn
SPRNHS Dummy variable for location 0.09 0.23
in the village of Spring House
OTHER Dummy variable for location 0.30 0.48
in areas other-than
the four original villages
STREET Dummy variable for location 0.13 0.38
on any of the major streets
R5TRAIN Dummy variable for location 0.04 0.27
within ¼ if a mile of either
Pennlyn or Gwynedd Valley
R-5 train stations
AMBLER Dummy variable for 0.03 0.16
location on the border
of the Borough of Ambler
The Value of Homes in Cluster Development Residential Districts...

Table 2 (continued) Variable Definition Mean Stan

Dev

QRT01 Dummy variables for 0.06 0.21

first quarter of 2005
QRT02 Dummy variable for 0.04 0.11
second quarter of 2005
QRT03 Dummy variable for third 0.04 0.12
quarter of 2005
QRT04 Dummy variable for fourth 0.02 0.09
quarter of 2005
QRT05 Dummy variable for first 0.03 0.13
quarter of 2006
QRT06 Dummy variable for second 0.07 0.24
quarter of 2006
QRT07 Dummy variable for third 0.04 0.15
quarter of 2006
QRT08 Dummy variable for fourth 0.06 0.20
quarter of 2006
QRT09 Dummy variables for first 0.05 0.16
quarter of 2007
QRT10 Dummy variable for second 0.07 0.33
quarter of 2007
QRT11 Dummy variable for third 0.09 0.37
quarter of 2007
QRT12 Dummy variable for fourth 0.03 0.16
quarter of 2007
QRT13 Dummy variable for first 0.06 0.23
quarter of 2008
QRT14 Dummy variable for second 0.03 0.15
quarter of 2008
QRT15 Dummy variable for third 0.08 0.28
quarter of 2008
QRT16 Dummy variable for fourth 0.07 0.30
quarter of 2008
QRT17 Dummy variable for first 0.04 0.22
quarter of 2009
QRT18 Dummy variable for second 0.03 0.24
quarter of 2009
QRT19 Dummy variable for third 0.04 0.25
quarter of 2009
QRT20 Dummy variable for fourth 0.05 0.30
quarter of 2009

to the typical problem of spatial autocorrelation. Basu and Thibodeau (1998), for
instance, argue that spatial dependence exists because nearby properties will often
have similar structural features and also share locational amenities. This is likely to be
true in this case given that clusters were often developed at the same time and share
the same location-specific amenities.
The WLS (plus SAR) procedure uses the same variables as the OLS to estimate the
regression. However, this technique uses the correlated errors of the geographic
information present in the data to improve prediction (see Pace and Gilley 1977;
and Carter and Haloupek 2000 for detailed treatment of procedure).
 P.K. Asabere

As shown in Table 2, control variables for the hedonic analyses include physical
property characteristics and time of sale. The study also includes several control
variables for location including: distance from the township center (TBD); dummy
variables for MLS specified areas of Gwynedd Village (GWYDD), Gwynedd Valley
(GWYVL), Penllyn(PENLYN), Spring House(SPRNHS), and OTHER for all other
locations). Also included are a dummy variable (STREET) for location on a major
township road (this is a catch-all dummy variable assigning 1 for location on any of
the major roads: Welsh Road, Norristown Road, Sumneytown Pike, 309 Expressway,
Bethlehem Pike, Township road, Tennis Road, Pennlyn Pike, Dekalb Pike, Swedesford
Road, and Gypsy Hill Road); proximity to Ambler Borough (AMBLER); and another
dummy variable (R5TRAIN) for proximity to R-5 suburban train stations at Pennlyn
and Gwynedd Valley.
Of the location variables, it is expected that TBD will carry a negative sign
indicating preference for location in proximity to the center of economic activities.
Relative to PENLYN, which is relatively not so affluent, it is expected that the
location variables GWYDD, GWYVL, SPRNHS, and OTHER will carry positive
signs consistent with local wisdom. The dummy variables STREET and R5TRAIN
are expected to carry positive signs indicating universal preference for access. The
dummy variable AMBLER for proximity to Ambler is expected to carry a negative
sign granted that the Ambler Borough is not as wealthy as Lower Gwynedd township,
relatively speaking.
Based on the Lower Gwynedd described above, several estimates are made using the
OLS and WLS procedures. As to be expected, the results based on WLS are slightly
qualitatively superior to the results based on the OLS. For the sake of brevity the WLS
results are reported in Table 3 (the OLS results are not reported). A detailed discussion
of the WLS results based on Table 3 is provided below.
The regression coefficients of the WLS regression results with correction for spatial
autocorrelation are reported in Table 3 with their t-statistics (next to them). As can be
seen in Table 3, the adjusted coefficient of determination (R2) for Models 1 and 2 are
0.79 and 0.81, respectively. These are reasonable compared with much of the hedonic
literature. An examination of variance inflation factors, tolerance levels and the correlation
matrix (not reported in Table 3) reveal no obvious signs of multi-colinearity.
First on the control variables for property characteristics, the following variables; Ln
(LOT); SQFT; (SQFT)2; AGE; (AGE)2; EXCL; GOOD; NSTORS; POOL; GARG;
BSMT; FIREPL; DECK; AC, and NBATHS; are all significantly different from
zero at conventional levels with expected signs. The variables NROOMS; and
POOR are statistically insignificant. It must, however, be noted that the partial effects
due to living area is already accounted for with the inclusion of NSTORS, SQFT,
(SQFT) 2 and BATHS.
Of the control variables for location, only the dummy variable GWYVL for Gwy-
nedd Village is significantly positive at conventional levels. The other location dummy
variables: GWYDD; SPRNHS; OTHER, and R5TRAIN; are all statistically insignifi-
cant. The variable for distance to the township center (TBD) is also not statistically
significant. The STREET dummy variable, however, is significantly positive as to be
expected at conventional levels. Relative to the first quarter of 2005 (QRT01), all the
quarterly variables from QRT02 through QRT13 (at the start of 2008) are statistically
insignificant at conventional levels. However, the estimated coefficients of QRT14, 16,
The Value of Homes in Cluster Development Residential Districts...

Table 3 The WLS Regression Results with correction for

spatial autocorrelation

Model 1 Model 2

Variable Coeff t-Stat Coeff t-Stat

CLUS 0.038 6.75*** 0.020 3.79***
OPEN —————— –————— 0.051 3.33***
DENSITY −0.022–3.01** −0.022–3.11***
Ln(LOT) 0.210 13.56*** 0.222 14.83***
NSTORS 0.085 13.22*** 0.084 13.08***
NROOMS 0.080 0.99NS 0.086 0.96NS
NBATHS 0.104 13.28*** 0.108 16.66***
SQFT 0.064 19.99*** 0.063 20.20***
(SQFT)2 0.002 13.01*** −0.024–13.44***
AGE −0.012–6.66*** −0.012–6.00***
(AGE)2 0.047 4.92*** 0.052 4.80***
EXCL 0.076 3.46*** 0.078 3.42***
GOOD 0.051 1.88** 0.050 1.91**
POOR −0.009–1.11NS −0.009–1.00NS
GARG 0.085 8.15*** 0.090 8.11***
BSMT 0.063 3.66*** 0.067 3.68***
FIREPL 0.071 10.50*** 0.677 11.32***
DECK 0.047 3.09*** 0.046 2.87**
AC 0.522 4.44*** 0.551 4.44***
POOL 0.083 4.36*** 0.083 4.39***
DOM 0.004 0.77NS 0.003 0.79NS
CONV 0.020 1.00NS 0.021 1.02NS
TBD −0.004–0.83 NS
−0.005–0.81NS
GWYDD 0.072 0.85NS 0.087 0.97NS
GWYVL 0.077 2.99*** 0.071 2.36**
PENLYN ———— –—— ———— –——
SPRNHS 0.034 1.55NS 0.029 0.89NS
OTHER 0.001 0.19NS 0.001 1.18NS
STREET 0.068 1.88* 0.068 1.83*
R5TRAIN 0.002 0.99NS 0.002 1.01NS
AMBLER −0.066–3.41*** −0.069–3.31***
QRT01 ———— –—— ———— –——
QRT02 0.011 0.07NS 0.014 0.08NS
QRT03 0.003 1.42NS 0.004 1.24NS
QRT04 −0.023–0.88 NS
−0.023–0.89NS
NS
QRT05 0.006 1.11 0.006 1.33NS
NS
QRT06 0.001 1.23 0.008 1.22NS
NS
QRT07 0.001 0.94 0.001 0.94NS
QRT08 −0.002–1.02NS −1.03–0.77NS
QRT09 0.001 0.08NS 0.00 0.07NS
QRT10 −0.011–0.07 NS
−0.014–0.083NS
QRT11 −0.003–1.45 NS
−0.004–1.246NS
QRT12 −0.022–0.88 NS
−0.021–0.89NS
 P.K. Asabere

Model 1 Model 2

QRT13 0.007 1.11NS 0.007 1.33NS

QRT14 −0.050–3.23*** −0.058–3.98***
QRT15 −0.001–0.94NS −0.001–0.94NS
QRT16 −0.038–2.02** −0.039–2.77**
QRT17 0.001 0.94NS 0.001 0.94NS
QRT18 −0.022–2.00** −0.021–2.00**
QRT19 −0.001–0.94NS 0.000 0.54NS
QRT20 −0.033–2.02** −0.033–2.77**
Constant 11.120 70.60*** 12.101 69.90***
Adjusted R2 0.790 0.810
F-Stat 122.44*** 140.02***
Root MSE 0.59 0.65

Dependent Variable is Ln(SP);

* indicates significant at 90 % level; **indicates significant at 95 % level; ***indicates significant at 99 %
level; NS indicates not significant

18, 19 are significantly negative. These generally negative coefficients towards the end
of the study period are consistent with the overall negative outlook of US real estate
markets towards the end of the study period (after 2008).
Now turning on the variables of interest, the estimated coefficient of cluster (CLUS) is
significantly positive as expected at the 99 % level of confidence. The magnitude of the
estimated coefficient on CLUS in Models 1(without the open space variable (OPEN)) is
0.038. However, part of this price premium is attributable to the permanent open spaces
which are parts and parcels of clusters. When the variable for open space (OPEN) is
introduced as shown in Model 2, the cluster (CLUS) premium drops from 3.9 % to 2.02 %
suggesting the relative importance the permanent open spaces. The open space variable
(OPEN) is associated with a premium of as much as 5.2 %, on average.
The dummy variables for the two types of clusters {CLUS (AA-1) and CLUS (A-1)}
were employed at earlier runs of the model (not reported). However, they both proved to
be statistically insignificant at conventional levels. The estimated coefficient on devel-
opment density (DENSITY) is significantly negative at conventional levels. In other
words, density of development, per se, has adverse impacts on value as to be expected.
The next section presents the “Conclusions” of this study.

Conclusions

The major finding of this study is that cluster developments will produce higher home
values, ceteris paribus. The estimated coefficient on CLUS is significantly positive at the
99 % level of confidence with magnitude of 0.038. However, when the open space
variable (OPEN) is introduced (as shown in Models 2) the magnitude of the estimated
coefficient of cluster (CLUS) drops from 0.038 to 0.020 suggesting the relative impor-
tance of the permanent open spaces in cluster developments. The estimated coefficient
on open space (OPEN) is significantly positive at the 99 % level of confidence as shown
in Model 2 with a magnitude of 0.051. The estimated coefficient on density of
The Value of Homes in Cluster Development Residential Districts...

development (DENSITY) is also statistically significant in both models with negative

signs suggesting the adverse nature of raising densities, per se, in a sub-urban setting
where market densities are lower than permitted densities. All the control variables work
as expected with predictable results. The findings of this study provide empirical support
for organic, green-by-design, residential development.

Acknowledgments I would like to thank the anonymous reviewers for their comments that helped
improve the paper. I would also like to thank Joseph A. Zadlo, the Zoning Officer of Lower Gwynedd
Township for information on the cluster developments. All errors and omissions remain my Own.

References

American Planning Association (2006). Section 4.7 Model Residential Cluster Development Ordinance
Model Smart Land Development Regulations Interim PAS Report, American Planning Association
(APA).
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